Doing Business in Iran, Opportunities and Challenges 2

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Companies looking to enter markets throughout the entire Middle East will have to accept regional customs and traditions to achieve success. But understanding nuanced customs is no small feat; Middle Eastern ways of life vary from country to country. Businesses that pay attention to the nuanced concerns, beliefs, and values of partners in the Middle East will find themselves miles ahead of their competition.

For starters, Westerners hoping to build productive relationships will need to respect and incorporate a collectivist perspective within their business mindset. Knowing the customs, traditions, laws and characteristics of the region is central toward building trust. Let no business executive forget “You may be a princess at home but are a commoner abroad.” Failure to adapt cost Polaroid dearly when they launched Pronto in France and ignored country manager. Black and Decker won at America but lost out in Asia with power tools to Makita. It will never be easy and a cake walk. The question is, are Western and US companies in particular willing to invest and work on this particular. You could do better by integrating local/cultural requirements (as done in China and India) to make even bigger gain exceeding the geographical boundaries of Iran.

In the west, many think that they know all about Iranians, having seen “Argo,” “Homeland” and myriad other media consistently feeding us a narrative of “dangerous Iranians.” Although there problems in almost every country, but there is a lot that Americans and many in the West are unclear about. Doing business in Iran is a more sophisticated matter that requires many considerations.

The country is full of sophisticated, world-class retail shops in high-end shopping malls. This is particularly true in Tehran, a cosmopolitan city full of world-class restaurants, broad boulevards, contemporary art museums and galleries and plenty of rich consumers. You can see stores like Mont Blanc, Massimodutti, Swarophsy, Manggo, United Collors of Beneton and many more brands spreading across Tehran. Many new shopping malls are being built in high end of Tehran and major cities. The Iran Mall, under construction with $1 billion invested, will be the largest mall in the world. The Iranian Revolutionary Guard owns and runs many of the major Iranian companies and has a huge vested interest in sanctions being removed and the country opening up, creating the much larger market opportunity.

Two-thirds of the population of the country is under 35, born after the revolution. Iranian are generally very aware of what goes on in the rest of the world, although filters and censorship do exist but are largely ineffective. VPNs (virtual private networks) are widely used to bypass the government filtering/blocking of certain websites, such as Facebook and Twitter. Iran has a 98 percent literacy rate, English is widely taught in schools, and there is a high Ph.D. rate among CEOs. Women are required to wear a headscarf, and in the past it had to cover all their hair, but now they are often brightly colored and pushed far back on the head, used more like a fashion accessory. Sixty percent of university students are women.

Its population is tech-savvy. Internet penetration is 53% across the population and 77% in Tehran, according to government data. About 11 million Iranians have mobile Internet access. Many of the country’s senior businesspeople—or their parents—were educated in the U.S. and still prize American engineering.Iran’s market for technology products and services is roughly $4 billion a year, estimates Forrester Research. When sanctions are lifted, according to analysts, the market could grow to $16 billion annually, roughly comparable to Saudi Arabia. Overall consumer expenditures are projected to be about $176.4 billion this year, with annual disposable income pegged at about $287 billion, according to research. Iran enjoys a highly educated population, but suffers from a high level of brain drain. Even under economic sanctions, in 2012 Iranians spent more than $75 billion on food, more than $20 billion on clothes, and $18.5 billion on tourism.

Like most countries in the world with business opportunities, there are many Chinese making the most of it. there are currently 40,000 to 50,000 Chinese in Iran, many speaking Farsi, and they are now in Iran looking for deals and doing business. Major French and German delegations with representatives of their top companies are currently actively pursuing post-sanction business opportunities. You can see on Open Iran News page all the updated international business news, and see which delegates are coming for which sector and what sort of deals they are making. For instance you can read that India ready to invest over $15 billion in Iran; seeks cheaper gas , or Novo Nordisk to build €70m plant in Iran.

Traveling as a tourist/visitor to Iran with a proper visa and following the rules is completely safe. Thousands of Western tourists visit Iran every year without incident. Iran issues tourist visas to Americans and citizens of all other countries, other than Israel. If you are American or UK citizen, while visiting, you are assigned a guide/minder, who both helps as any other guide would, and also enforces the regulations as to where you are allowed to go and what you are allowed to do. Americans apparently don’t need any special permission from the U.S. government to travel to Iran. You cannot enter Iran on any passport with an Israeli stamp. Most European citizens can obtain visa on the airport for 15 days visit as long as they a contact name in Iran with a telephone number confirming that they are happy to host them. Traveling to Free Zones like Kish Island is visa free and foreign national can enter and stay there for 15 days.

Although Iran may seem to have a lingering reputation as a difficult place for outsiders to do business due to bureaucracy, corruption and some political interference, but things have started to improve as Iran is very keen to join the international economy. Iranian officials say they are trying to address those issues in hopes that foreign companies see it as a huge potential market and not a legal and regulatory morass. Oil contract terms that would allow for greater profit are being drawn up, officials said, and efforts at transparency and corruption-busting are being unveiled. “We want less bureaucracy,” Mehdi Hosseini, a top adviser to Iran’s oil ministry, said in an interview. It could be a slow process to modernize Iran’s business environment. Though it has had business and political relations with Europe, despite sanctions.

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